News: International

Potential Impact of U.S. Sanctions on Iran

Yesterday, the newest batch of U.S. sanctions on Iran will took effect. In this round, Iran’s oil, banking, energy and shipping sectors have been targeted. The effect is already showing.

These sanctions will see hundreds of names added to its list of blocked entities from today. The United States is working with other countries to ensure that Iran’s oil exports are cut off as much as possible.

The Trump administration has highlighted that the Iranian regime is spending large sums on the financing of terrorist proxies, boosting the Assad regime in Syria, supporting militias, and so on, and it is adamant to cut Iran off from these funds.

Last week, the U.S. State Department spoke about the loopholes left behind from the previous administration, in particular the one that allowed foreign countries to still import oil and natural gas by-products despite the sanctions being in place. Secretary of State Mike Pompeo said: “This loophole allowed millions of dollars to continue to flow to the regime. These sanctions hit at the core areas of Iran’s economy, and they are necessary to spur changes we seek on the part of the regime. The maximum pressure we imposed has caused the rial to drop dramatically, the country’s Cabinet is in disarray, and the Iranian people are raising their voices even louder against a corrupt and hypocritical regime.”

On announcing that sanctions would be re-imposed, the impact was immediate. Countries started to put an end to their business dealings with Iran and negotiations were abandoned. Not many were prepared to get caught in the crosshairs of U.S. sanctions. The Rial – the country’s national currency – also plummeted. With these new sanctions taking effect, it is certain that the consequences will be severe for Iran’s already struggling economy.

Conditions in the country will get worse and the United States has already laid out its 12 demands and conditions on Iran. The sanctions are in place, primarily, so that Iran will come back to the negotiating table. Trump would like to see a new deal that includes all of the concerns that the administration has with regards to Iran’s ballistic missile program, its belligerence in the region and its terrorist activities.

The Iranian regime will have to take some drastic action soon because the pressure is mounting and it will not be able to survive in the current climate for much longer.

The people of Iran are putting the regime under intense domestic pressure and they want to see regime change. They know that the regime is incapable of moderation and that it will never change. The regime too can see that its days are numbered, but it will try to hold on to power for as long as it can.

It is probable that Iran will try to avoid sanctions in the same way it has done previously. Oil exports, for example, will be pushed via a third country. All the regime is trying to do now is prolong its survival. Not guarantee it.